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James Turk - There’s a Raging Battle in Gold Below $1,800
The bull/bear battle near the $1,800 level in gold is raging, so today King World News interviewed James Turk out of London to get his take on where gold and silver are headed. When asked about the fierce action taking place just below $1,800 in gold Turk responded, “We have an interesting battle going on, Eric, there is a lot of pressure to get gold under $1,800 an ounce. Every time we go into the $1,700s, there is extraordinary underpinning of the market because of massive physical demand, just as your London source related to you yesterday.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
September 22, 2011
James Turk continues:
“But the real story is playing out in the interest rates. On each push below $1,800, gold’s interest rates go out of whack. What’s happening, in effect, is gold is moving toward backwardation every time it moves below $1,800. I don’t think you can rely on the GOFO rate, the gold forward rate, any longer for an accurate picture of gold’s interest rates.
All of this, of course, relates to yesterday’s Fed announcement, which confirms they are going to keep dollar interest rates exceptionally low through mid 2013. In this present low interest rate environment, it is very easy for gold to slip into backwardation, and clearly central banks don’t want that outcome. Everybody knows that when gold goes into backwardaton, it’s game over for national currencies.
Every once in a while you see a moment in the gold market when all of the factors impacting the gold price are screaming, ‘Buy now!’ Each and every time gold breaches the $1,800 level to the downside, we see one of those rare moments. While we may move sideways for a few more days until everybody reads the writing on the wall, I think we should be preparing for much higher prices. So I am sticking to my $2,000 target before the end of October.”
When asked silver specifically Turk responded, “When it comes to silver, Eric, I think the critical factor now is sentiment. We’re at the exact opposite point vs where we are at the end of April when silver was roughly $50. Back then everybody was paying attention to silver’s big move and anticipating higher prices....
Continue reading the James Turk interview below...
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“Today silver is barely mentioned in the media and very few people are paying attention. Investors should be paying attention because silver is creeping steadily higher due to insatiable demand for physical metal. So I am quite impressed by silver’s consolidation, which is going from strength to strength in a slow and steady way.
We’re moving closer and closer to the day when that $42 to $43 resistance area is finally hurdled. Everybody has to be impressed by the powerful base that silver is building. This is the kind of base that sets up a spectacular move.”
When asked about the mining shares Turk stated, “One has to be impressed by the relative strength of the mining shares, even when the broader stock market is heading lower, the mining stocks seem resistant to any selling pressure. There are two reasons for this, Eric. First, all one has to do is look at the cash flows these companies are generating and then relate that to their market caps to recognize how undervalued these companies are.
Second, the mining shares, in my view, are also anticipating higher prices for both gold and silver. Institutional money likes buying stocks when they are good value, particularly when the potential exists for further upside appreciation. That is the opportunity offered by the gold and silver miners at these current valuations.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
